Forex Patterns and Probabilities E-Book

Ed Ponsi

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch

Seitenzahl: 309

Veröffentlichungsjahr: 2011

Beschreibung

While most books on trading deal with general concepts and shy away from specifics, Forex Patterns and Probabilities provides you with real-world strategies and a rare sense of clarity about the specific mechanics of currency trading. Leading trading educator Ed Ponsi will explain the driving forces in the currency markets and will provide strategies to enter, exit, and manage successful trades. Dozens of chart examples and explanations will guide you each step of the way and allow the reader to "look over the shoulder" of a professional trader hard at work at his craft. This book provides traders with step-by-step methodologies that are based on real market tendencies. The strategies in this book are presented clearly and in detail, so that anyone who wishes to can learn how to trade like a professional. It is written in a style that is easy to understand, so that the reader can quickly learn and use the techniques provided.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Preface

Acknowledgments

About the Author

PART I - The World’s Most Dynamic Trading Market

CHAPTER 1 - Getting Started in Forex

FROM STOCKS TO FOREX

GETTING TO WALL STREET

WELCOME TO THE JUNGLE

FOOTBALL AND FOREX

STOCK MARKET HEADACHES

WELCOME TO FOREX

A NEW BEGINNING

CHAPTER 2 - All About Forex

THE CANADIAN DOLLAR AND THE U.S. DOLLAR

THE EURO AND THE U.S. DOLLAR

TRADING TERMINOLOGY

AN EASY WAY TO UNDERSTAND THE EXCHANGE RATE

CHAPTER 3 - Questions and Answers

WHY DOES THE BIG MONEY TRADE FOREX?

WHY IS FOREX SUDDENLY SO POPULAR?

HOW DO TRADERS MAKE MONEY IN THE FOREX MARKET?

WHY DO CURRENCIES TRADE IN PAIRS?

HOW CAN I TRADE TWO CURRENCIES AT ONE TIME?

HOW IS 24-HOUR-PER-DAY TRADING POSSIBLE?

HOW IS THE TRADING DAY STRUCTURED?

GREENWICH MEAN TIME

CHAPTER 4 - Technical Analysis and the Forex Market

THE THEORY BEHIND TECHNICAL ANALYSIS

STATISTICAL SURVEY

FEAR OF THE UNKNOWN

TRADING PATTERNS AND TECHNICAL INDICATORS

THE PSYCHOLOGY BEHIND THE MARKET

MOVING BEYOND TECHNICAL ANALYSIS

TRENDS

PROPER ORDER

FIBONACCI TECHNIQUES

CHAPTER 5 - Things You Need to Know Before Trading Forex

THE “TRIPLE THREAT” TRADER

GAINING EXPERIENCE

WHICH PAIR TO TRADE?

COMMODITY CURRENCIES

DON’T LIMIT YOURSELF

TRADING AND KARMA

PART II - Trading Strategies for Trending Markets

CHAPTER 6 - Understanding Trends and Tendencies

TRADING CONDITIONS

THE IMPORTANCE OF MAINTAINING OBJECTIVITY

BEGIN WITH A TENDENCY

PUTTING THE TREND TO WORK

SELF-FULFILLING PROPHECY

TAKE ME TO THE RIVER

HOW TO DETERMINE IF THE MARKET IS TRENDING

CHAPTER 7 - The Anatomy of a Trend

WHY TRENDS FORM

DON’T FIGHT THE TREND

CHAPTER 8 - Forex Multiple Time Frame Strategy

WHY DOES IT WORK?

COMBINING FIBONACCI AND TREND

OVERBOUGHT DOES NOT EQUAL “SELL”

PICKING TOPS AND BOTTOMS

THE ENTRY SIGNAL

PLACING THE STOP

GETTING OUT

WELCOME TO THE REAL WORLD

TWEAKING THE EXITS

EXECUTING THE PLAN

SECOND-GUESSING

BRINGING IT HOME

THE DEVIL’S ADVOCATE

WHEN TO STAY OUT

RELOADING THE TRADE

FANTASY VERSUS REALITY

PHANTOM SIGNAL

TEMPORARY SUCCESS AND FAILURE

THE STOP RUN

CHAPTER 9 - The FX-Ed Trend Technique

TRENDS ARE SELF-SUSTAINING

DIFFERENCE OF OPINION

BIG MONEY AT WORK

THE COMMON DENOMINATOR

LONG OR SHORT

IDENTIFYING THE TREND

FILTERING THE TREND

THE CATALYST

PLACING THE STOP

VOLATILITY STOP

COMPARING APPLES TO APPLES

ATR CALCULATION

THE ENTRY

THE STOP

THE TRADE

DON’T FISH FOR MINNOWS

BACK TO THE TRADE

DENOUEMENT

THE NEWS VERSUS THE TREND

APPEARANCES CAN BE DECEIVING

MORE THAN ONE CHANCE

PARTIAL EXIT EXERCISE

DISCRETIONARY AND STRATEGIC EXITS

FAULTY WIRING

PARTIAL EXIT TECHNIQUE

RELOADING

IMPORTANT POINTS TO CONSIDER

FINAL THOUGHTS

PART III - Nontrending Trading Techniques

CHAPTER 10 - The Ultimate Indicator

THE PRICE IS THE KEY

WHY SUPPORT BECOMES RESISTANCE

THE PLEASURE PRINCIPLE AND TRADING

PRICE ACTION

DON’T STAND IN FRONT OF A FREIGHT TRAIN

CHAPTER 11 - Keys to Intraday Breakouts

ASCENDING AND DESCENDING TRIANGLES

TREND FILTER

TIME-OF-DAY FILTER

SUMMARY

CHAPTER 12 - Flags and Pennants

PENNANTS

FLAGS

FILTERING ENTRIES

SUMMARY

CHAPTER 13 - The Squeeze Play

THE CYCLE OF VOLATILITY

PERCEPTION MOVES THE MARKET

VOLATILITY BREAKOUT STRATEGY

CHAPTER 14 - The Round Trip

WHY ROUND NUMBERS CAPTURE OUR ATTENTION

WHY ROUND NUMBERS ARE EFFECTIVE

ROUND NUMBERS AND FOREX

THE FIRST BOUNCE IS THE BEST BOUNCE

USING THE MOVING AVERAGE

THE STRATEGY IN ACTION

CHAPTER 15 - The Interest Rate Edge

THINK LIKE THE BIG BOYS

INTEREST RATE DIFFERENTIALS

HERE’S HOW IT WORKS

CHANGING DIFFERENTIALS

WHAT’S THE BIG DEAL?

COLLECTING INTEREST

U.S. DOLLAR/JAPANESE YEN

LONG-TERM PLAY

LOOKING AHEAD

CHAPTER 16 - The Boomerang

FADING FALSE BREAKOUTS

THE STRATEGY

SETTING THE PARAMETERS

ENTERING THE TRADE

SIMPLE BUT EFFECTIVE

PART IV - Take Control of Your Trading Destiny

CHAPTER 17 - How to Achieve Spectacular Gains

KEEP YOUR EYES ON THE ROAD

PROPER GOAL SETTING

BREAKING DOWN YOUR GOALS

CONSISTENCY IS THE KEY

WHAT HAPPENS WHEN I REACH MY GOAL?

CHAPTER 18 - The Forex Playing Field

EVENING THE ODDS

THE HOUSE HAS THE EDGE

MAKE THE PLAYING FIELD BIGGER

BUT THE OTHER TRADING INSTRUCTOR SAID...

LET’S DO THE MATH

CHANGING THE EQUATION

WHY DOESN’T EVERYONE DO IT?

HUGE GAINS WITH MINIMAL EFFORT!

WHAT WE CAN LEARN FROM THE “SMART MONEY”

NOW GET OUT THERE AND WIN

CHAPTER 19 - Trading Lessons from Life

PANIC AT THE BEACH

THE ENDLESS TOURNAMENT

SUMMARY

CHAPTER 20 - What You Don’t know Can Hurt You

SARCASM ALERT!

KNOW WHEN TO RETREAT

THE “95 PERCENT WINNERS STRATEGY”

BEWARE THE BACK TESTER

HYPOTHETICALLY SPEAKING

CHAPTER 21 - A Tale of Two Traders

INDIVIDUALS VERSUS INSTITUTIONS

THE DIFFERENCE BETWEEN AMATEURS AND PROFESSIONALS

CHAPTER 22 - Some Final Thoughts

A GOOD TRADE IS NOT THE SAME THING AS A WINNING TRADE

PROPER EXECUTION IS CRITICAL

TAKE RESPONSIBILITY FOR YOUR ACTIONS

KEEP IT SIMPLE

PHYSICAL VERSUS MENTAL

IN CLOSING

Glossary

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding.

The Wiley Trading series features books by traders who have survived the market’s ever-changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional, or somewhere in between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, please visit our web site at www.WileyFinance.com.

Copyright © 2007 by Ed Ponsi. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

Wiley Bicentennial Logo: Richard J. Pacifico

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic formats. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Ponsi, Ed, 1961-

Forex patterns & probabilities : trading strategies for trending & range-bound markets / Ed Ponsi.

p. cm. - (Wiley trading series)

Includes index.

ISBN 978-0-470-09729-8 (cloth)

1. Foreign exchange market. I. Title. II. Title: Forex patterns and probabilities.

HG3851.P65 2007

332.4′5-dc22

2007001693

To Mom, who taught me that anything is possible.

To Dad, who taught me the value of hard work.

Preface

Most books on trading deal with general concepts and shy away from specifics. There are plenty of books about the origins and history of currency trading, but very little in the way of useful, practical trading information. Forex Patterns and Probabilities provides readers with a rare sense of clarity about the specific mechanics of currency trading—real world strategies that tell the student when to enter, when to exit, and how to manage trades.

This book provides traders with step-by-step methodologies that are based on real market tendencies. The strategies in this book are presented clearly in great detail, so that anyone who wishes to can learn how to trade like a professional. It is written for the new or experienced trader who needs specific, useful information to trade the Forex market.

Forex Patterns and Probabilities begins with a whirlwind tour of life on a Wall Street trading desk, as the reader is transported to the exhilarating world of professional trading. Then, the author explains the “playing field” of the forex market, using powerful metaphors that relate trading scenarios to situations in everyday life.

Now that the reader has been sufficiently prepared, Ed unleashes several specific trading strategies designed for trending markets. Trends create some of the most highly profitable trading situations, and the reader is given an arsenal of specific techniques to profit from them. Ed’s detailed explanations, backed by over 160 chart images, will leave no doubt in the mind of the reader exactly what the author is doing, and why he is doing it. Ed shares every part of his thought process, leaving nothing to the imagination.

Next, the book delves into a variety of trading techniques, all based on unique market tendencies. The author introduces the reader to the Ultimate Indicator, and the Keys to Intraday Breakouts. He then explains the proper usage of Triangles and Filters, and demonstrates the correct way to trade consolidation patterns such as Flags and Pennants. The dozens of chart examples and explanations allow the reader to “look over the shoulder” of a professional trader, hard at work at his craft.

Next, Ed introduces the volatility-based “Squeeze Play,” and two daytrading techniques called the “Round Trip” and the “Boomerang.” Yet another strategy, the “Interest Rate Edge,” shows the reader how to trade like a hedge fund, revealing the techniques and philosophies used by the “smart money” to make fortunes.

Armed with this impressive arsenal of strategies and techniques, the reader is now presented with the means to turn this knowledge into power—and profit. In “How to Achieve Spectacular Gains,” Ed shows exactly how professional traders make big money consistently, year after year. He then demonstrates the practical use of game theory in forex trading—a subject of immense importance, and a key to trading success.

In “What You Don’t Know Can Hurt You,” Ed gives an insider’s insight into the pitfalls of forex trading and how to avoid them. Then, in “A Tale of Two Traders,” the reader learns how to emulate the behavioral patterns of successful professional traders and how to escape the mind-set of the amateur.

Forex Patterns and Probabilities is packed with useful information from a Wall Street pro, yet it is written in an informal, easy-to-digest style that nearly anyone can understand.

Acknowledgments

I’d like to thank everyone who helped to make the creation of this book a reality. In particular, I’d like to thank: Kevin Commins, first for suggesting the writing of this book, and then for granting me the freedom to create something truly special and unique.

Emilie Herman, whose hard work and encouragement accentuated my strengths and concealed my weaknesses.

Josep Giró, an artist who fulfilled one of my lifelong dreams by turning me into an animated cartoon character.

And most of all, to my students, who constantly push me to be the very best forex trading instructor that I can be. Thank you one and all!

About the Author

Ed Ponsi is the president of FXEducator.com and is the former chief trading instructor for Forex Capital Markets (FXCM). An experienced professional trader and money manager, Ed has advised hedge funds, institutional traders, and individuals of all levels of skill and experience. He is a regular contributor to FXStreet.com, TradingMarkets.com, and SFO Magazine, and has made numerous appearances on television, radio, online, and in print.

Ed’s claim to fame is that he pulls no punches. His dynamic and humorous style of teaching sets him apart from the suit-and-tie crowd, making him one of the most sought-after lecturers in the financial world today. His no-nonsense, irreverent demeanor has earned him the moniker “The Rock Star of Forex Trading.”

Ed’s popular DVD series, “FXEducator: Forex Trading with Ed Ponsi” is now available at www.fxeducator.com and from select distributors worldwide. For more information, email us at [email protected].

PART I

The World’s Most Dynamic Trading Market

Trading the forex market is one of the most exciting and potentially profitable endeavors that you can undertake. We trade the entire world, matching the world’s economies against one another. This market is vast, much larger than any stock or futures market. There is nothing else like it on earth.

The stakes are high; fortunes can be won or lost quickly. In order to succeed in this realm, we must first learn to understand it. ...

Copyright © 2006 Josep Giró. All rights reserved.